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Old 9th July 2013, 10:43   #61
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Default Reason for downtrends in Indian Auto Industry - Auto company waiting periods

Imagine this, when a customer basically books a Swift Dzire and is quoted a waiting period of 7 months, basically the person has postponed his buying decision by 7 months. Now imagine when millions of such buyers are postponing their purchase by 7 months, what we see is a total industry downtrend, which is exactly whats happening now.

The Auto industry has till date been boasting of waiting periods, not realizing that they are killing their own sales and their peer's business.

There is no point blaming the govt and its taxation for the sale downturn, the truth is they lack capacity to service the demand. Imagine if the govt frees up all the cess on the vehicles. The auto industry just doesnt have the capacity to handle the demand.

For auto industry just similar to any other FMCG goods, the main key to succeed is to make buyers change their car frequently. If someone is delaying one's purchasing decision by half an year, it is equable to have lost 1/5th of a customer.

Just my two cents.
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Old 9th July 2013, 12:02   #62
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

Going by your logic, people who entered the wait list 7 months ago would be taking deliveries of their cars now, but that doesn't seem to be the case. Manufacturers have reduced their wait lists to nearly none and Maruti has also reduced their capacity (Maruti Suzuki cuts diesel engine production at Manesar) for diesel engines.

In my opinion, the Indian auto industry has reached a point where it has to wait and watch while more Indians are lifted into the middle and upper middle class and gain purchasing power to make expensive purchases. The market might have saturated with the current set of buyers.

Make buyers change their cars frequently? What do you suggest, we start making cars with planned obsolescence?
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Old 9th July 2013, 12:49   #63
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

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Originally Posted by hellmet View Post
In my opinion, the Indian auto industry has reached a point where it has to wait and watch while more Indians are lifted into the middle and upper middle class and gain purchasing power to make expensive purchases. The market might have saturated with the current set of buyers.
Saturated? The Indian market? No way.

The reasons for the downtrend are:
* Increasing cost of purchase (Cars in India are priced higher than pretty much anywhere else in the world owing to taxes and what not)
* Increasing cost of maintenance (high cost of consumables and spares)
* Sky-rocketing fuel prices
* Lack of adequate infrastructure (Have you seen the roads? Huh, what roads?)
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Old 9th July 2013, 13:05   #64
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

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Saturated? The Indian market? No way.

The reasons for the downtrend are:
* Increasing cost of purchase (Cars in India are priced higher than pretty much anywhere else in the world owing to taxes and what not)
* Increasing cost of maintenance (high cost of consumables and spares)
* Sky-rocketing fuel prices
* Lack of adequate infrastructure (Have you seen the roads? Huh, what roads?)
One very important reason that you have missed, is a credit crunch. Loan rates are higher today, and banks are not as excited about lending either. A high inflation without any accompanying growth has caused the RBI to reduce the credit availability.

Add to that reducing growth, which doesnt seem like it will bounce back to the 8% level any time soon means people are not confident of the future. Thus people arent sure that they will be able to sustain auto EMI payments for their cars for the next 3-5 years, the period of most auto loans. The middle class is not sure how much their income will rise, and are looking at increase in the prices of basic commodities like food, electricity etc.

So they dont want to take a risk by piling on big EMIs for a car.

A couple of years back India had bucked the world recession and had shown strong growth. Thus people were confident of their future earnings, and were upto buying luxury goods like cars.

If India as a nation was more confident about its future growth path, then we would be buying cars left right and center despite the increasing costs of owning a car.

The moment India comes back to a 7.5%+ growth trajectory, you can expect the huge waiting lists to return with a vengeance. Hopefully a strong central govt, one that is ready to take the right policy decisions in a quick and time bound manner, will be formed after the next general elections.
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Old 9th July 2013, 13:22   #65
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

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Originally Posted by EagleEye View Post
Saturated? The Indian market? No way.

The reasons for the downtrend are:
* Increasing cost of purchase (Cars in India are priced higher than pretty much anywhere else in the world owing to taxes and what not)
* Increasing cost of maintenance (high cost of consumables and spares)
* Sky-rocketing fuel prices
* Lack of adequate infrastructure (Have you seen the roads? Huh, what roads?)
Agree with your points EagleEye. Cars in India cost exponentially more than European & other such markets and to top on that, what we get is a de-graded engine, bad plastics and compromised safety. They are already munching too much money and the Govt. is even worse, taxing them to finance their corruption. Add fuel prices to that, one of the highest in the world, mostly due to taxes that the Indian Govt. lays on the petroleum products or the faltering Rupee which breaches its lowest level everyday.

Read yesterday that most manufacturers are all set to increase the prices again on the back of depreciating rupee. Vicious circle.
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Old 9th July 2013, 13:27   #66
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

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Originally Posted by EagleEye View Post
Saturated? The Indian market? No way.

The reasons for the downtrend are:
* Increasing cost of purchase (Cars in India are priced higher than pretty much anywhere else in the world owing to taxes and what not)
* Increasing cost of maintenance (high cost of consumables and spares)
* Sky-rocketing fuel prices
* Lack of adequate infrastructure (Have you seen the roads? Huh, what roads?)
If a family needs a car, they'll get it anyway. None of the limitations you mention would deter them from the purchase.

What has probably reduced is the number of casual or wants-based purchases that totally depend on the factors you have listed.
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Old 9th July 2013, 13:28   #67
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

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Originally Posted by saket77 View Post
Agree with your points EagleEye. Cars in India cost exponentially more than European & other such markets and to top on that, what we get is a de-graded engine, bad plastics and compromised safety. They are already munching too much money and the Govt. is even worse, taxing them to finance their corruption. Add fuel prices to that, one of the highest in the world, mostly due to taxes that the Indian Govt. lays on the petroleum products or the faltering Rupee which breaches its lowest level everyday.

Read yesterday that most manufacturers are all set to increase the prices again on the back of depreciating rupee. Vicious circle.
Very valid points. Anyone who has moved back to India after working abroad will know what the cost of ownership in India means. The cost of ownership as a % of annual income is far higher in India than in any other market. When you add cost of capital to that, it makes owning a car a real luxury.
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Old 9th July 2013, 13:54   #68
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

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Originally Posted by RoadTrippin View Post
The cost of ownership as a % of annual income is far higher in India than in any other market. When you add cost of capital to that, it makes owning a car a real luxury.
Right. The only reasons that I am not thinking of an upgrade as of now is that the ever increasing fuel costs and the expensive maintenance of bigger brands. Given the infrastructure & the weather our country has, the maintenance costs are much much higher and exorbitant pricing of spares & even running consumables by manufacturers are simply a big big turn off. The manufactures are hell bent on squeezing the money out of the pockets of its existing customers based on a common marketing theory that 'acquiring a new customer is far more expensive than retaining an old customer'

Summing up in one line: And I believe that my plight is the the plight of general buyers in the market as well.
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Old 9th July 2013, 14:01   #69
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

IMHO, the single biggest factor is downturn in economy- this has led to lower increments, low (no?) bonuses for a couple of years no, leading to lower disposable income. Factor in the double whammy of high inflation, and the kitty seems to shrink. This creates uncertainty in people and any big ticket item purchase is reconsidered.

Issues like lack of infra, high fuel prices (relative to overall income) etc have been there for a while, but till last year the auto industry was booming. so I dont think these are issues majorly impacting the present downturn
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Old 9th July 2013, 14:28   #70
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

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Originally Posted by hellmet View Post
If a family needs a car, they'll get it anyway. None of the limitations you mention would deter them from the purchase.
No sir, if a family needs a car they'll continue using their 6 year old car and not buy a new one because of the limitations I've mentioned.


Quote:
Originally Posted by RoadTrippin View Post
The cost of ownership as a % of annual income is far higher in India than in any other market. When you add cost of capital to that, it makes owning a car a real luxury.
Exactly! The problem is, though, that cars are practically speaking not luxury items and is a thing of necessity. Unfortunately the government doesn't realize this.
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Old 9th July 2013, 15:22   #71
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

I dont know about other cities but Bombay has literally no roads left for cars to ply on. There are more potholes than roads right now. Everyday people are spending 2/3 hours for half hour commutes and this doesn't seem will change soon.

In this scenario along with the fuel prices and the credit crunch, those who have bought cars will continue to use them but new members joining the car club will definitely decrease or postpone their purchases.

Don't understand why these car manufacturers cannot lean on governments and form lobbies for better roads. It will definitely bring them more business. I am sure they can bribe more than the the BMC contractors who build such shitty roads.

Cheers
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Old 9th July 2013, 17:13   #72
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Default Re: Reason for downtrends in Indian Auto Industry - Auto company waiting periods

Waiting period was when the sales were booming. With competition increasing the waiting period has gone down.

The major reason for this is high fuel prices, inflation and slow economy. We as a family have 5 cars and replace a car every year but this year we decided to continue using the swift for atleast another year which was due for replacement this diwali. Not that we cant afford it but because our existing car meets our need and why spend unnecessarily when economy is unstable and bad.

Further the modern cars do last longer and age better. So average 1st ownership period has gone up. People are using the same car for more years because its able to serve without issues.

Thanks to our government and heavy taxes on automobiles and fuels in India (for which we dont get any service) Indian automobile industry might very well crash and no company will dare take risks in such an economy in future.
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